The ABS defines research and development (R&D) as systematic investigation or experimentation involving innovation or technical risk, the outcome of which is new knowledge, with or without a specific practical application, or new or improved products, processes, materials, devices or services.

Statistics on the amount of expenditure and human resources devoted to R&D in the business sector are collected annually through a survey of all likely R&D performers. Comparable statistics on the higher education, government (national and state/territory) and private non-profit sectors are collected biennially.

Tables 25.1 and 25.2 summarise the latest statistics available. The data show that after increasing by only 2% in the period 1996-97 to 1998-99, gross expenditure on R&D increased by 16% from $8,940m in 1998-99 to $10,344m in 2000-01. All sectors showed an increase in R&D expenditure compared with 1998-99.

25.1 EXPENDITURE ON R&D

1996-97

1997-98

1998-99

1999-2000

2000-01

2001-02

Sector

$m

$m

$m

$m

$m

$m

Business

4,234.7

4,221.1

4,094.7

4,112.4

4,917.4

5,545.5

Government

Commonwealth

1,266.6

n.a.

1,207.1

n.a.

1,424.8

n.a.

State/territory

797.7

n.a.

862.8

n.a.

943.6

n.a.

Total

2,064.3

n.a.

2,070.0

n.a.

2,368.4

n.a.

Higher education(a)

2,307.6

n.a.

2,555.1

n.a.

2,774.6

n.a.

Private non-profit

185.8

n.a.

220.1

n.a.

283.2

n.a.

Total

8,792.4

n.a.

8,939.9

n.a.

10,343.5

n.a.

(a) Data for the calendar year ending within the financial year shown.

In terms of business enterprise R&D, Australia's ratio of R&D expenditure to GDP (0.72%) is again below the ratios for the industrialised countries referred to earlier, and is also below the rates for the Czech Republic and Ireland.

For government sector R&D as a percentage of GDP, Australia ranks higher. An R&D to GDP ratio of 0.35% places it fifth in the group of Organisation for Economic Co-operation and Development (OECD) member countries, behind only Iceland (0.71%), France (0.38%), New Zealand (0.37%) and Finland (0.36%). Government sector R&D as a percentage of GDP is much higher for Australia than for the United States of America, Canada or the United Kingdom.

25.3 EXPENDITURE ON R&D AS A PERCENTAGE OF GDP, OECD countries - 2000-01

Business

Government

Higher education

All sectors(a)

Country

%

%

%

%

Sweden(b)

2.74

0.12

0.78

3.65

Finland

2.41

0.36

0.61

3.40

Japan

2.11

0.29

0.43

2.98

Iceland

1.56

0.71

0.45

2.77

United States of America

2.04

0.18

0.38

2.72

Korea, Republic of (South)

1.96

0.35

0.30

2.65

Switzerland

1.95

0.03

0.60

2.63

Germany

1.75

0.34

0.40

2.49

Denmark(b)

1.42

0.32

0.43

2.19

France

1.37

0.38

0.41

2.18

Belgium(b)

1.40

0.06

0.47

1.96

Netherlands

1.11

0.25

0.57

1.94

Canada

1.09

0.22

0.55

1.87

United Kingdom

1.21

0.22

0.38

1.85

Austria

n.a.

n.a.

n.a.

1.84

Norway(b)

0.92

0.25

0.47

1.65

Australia

0.72

0.35

0.41

1.53

Czech Republic

0.80

0.34

0.19

1.33

Ireland

0.83

0.09

0.23

1.15

Italy

0.53

0.20

0.33

1.07

New Zealand(b)

0.31

0.37

0.35

1.03

Spain

0.50

0.15

0.28

0.94

Hungary

0.36

0.21

0.19

0.80

Portugal

0.22

0.19

0.29

0.79

Poland

0.25

0.23

0.22

0.70

Greece(b)

0.19

0.15

0.33

0.67

Slovak Republic

0.44

0.17

0.06

0.67

Turkey

0.21

0.04

0.39

0.64

Mexico(b)

0.11

0.19

0.11

0.43

(a) Includes private non-profit.(b) Data for 1999-2000.

Source: OECD, 'Main Science and Technology Indicators, 2003/1'.

Source of funds for expenditure on R&D

In 2000-01, the business sector funded 46% of all Australian expenditure on R&D. This compares with 41% recorded in 1990-91. The Australian (Commonwealth) Government funded 38% of R&D in 2000-01 (down from 44% in 1990-91) and the state and territory governments funded 8% (down from 11% in 1990-91).

In 2000-01, 92% of funding for R&D carried out by businesses came from the business sector (down from 95% in 1990-91). Commonwealth Government organisations provided 3% of funding for business R&D expenditure in 2000-01.

About 85% of Commonwealth Government sector R&D was funded by Commonwealth Government organisations in 2000-01. The Commonwealth Government proportion of self-funding has dropped from 91% 10 years ago.

About 69% of state government expenditure on R&D was funded by state government organisations in 2000-01. This is significantly lower than a decade earlier, when the proportion was 79%.

About 86% of higher education R&D funding in 2000-01 came from the Commonwealth Government (compared with89% in 1990-91). Business enterprises provided 5% of the funding in 2000-01, up from 2% a decade earlier.

Commonwealth Government organisations funded 26% of the R&D of the private non-profit sector in 2000-01, while the contribution by state governments was 11%.

Tables 25.4 and 25.5 show the data for 2000-01 and 1990-91 respectively.

25.4 EXPENDITURE ON R&D, Source of funds - 2000-01

Commonwealth Government

State
government

Businesses

Other Australian(a)

Overseas

Total

Sector

$m

% of
total

$m

% of
total

$m

% of
total

$m

% of total

$m

% of
total

$m

Business

168.5

3.4

8.4

0.2

4,504.5

91.6

28.3

0.6

207.6

4.2

4,917.4

Government

Commonwealth

1,213.2

85.1

27.5

1.9

76.9

5.4

73.0

5.1

34.2

2.4

1,424.8

State/territory

71.4

7.6

650.1

68.9

54.5

5.8

159.9

16.9

7.7

0.8

943.6

Total

1,284.6

54.2

677.6

28.6

131.4

5.5

232.9

9.8

41.9

1.8

2,368.4

Higher education(b)

(c)2,395.6

86.3

87.9

3.2

136.2

4.9

94.2

3.4

60.7

2.2

2,774.6

Private non-profit

72.5

25.6

29.8

10.5

18.4

6.5

136.2

48.1

26.3

9.3

283.2

Total

3,921.2

37.9

803.7

7.8

4,790.5

46.3

491.6

4.8

336.5

3.3

10,343.5

(a) Includes funds provided via government levies.(b) Data for calendar year 2000.(c) Includes $1,746m of General University funds, the majority of which is funding from the Commonwealth Government.